Compare Low Overdraft Fees

Low overdraft fee accounts enable us to minimise our monthly overdraft fees. Of course, everyone's financial situation is different, but the table below should help guide you towards the cheaper overdraft options.

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Monthly interest of 1.50% AER/1.49% gross (variable) payable on balances up to £20,000

1.50%
AER

£5 Per Month

£500Per Month

£1per day

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Representative Example: 0% EAR (variable) Arranged Overdraft. Arranged Overdraft Usage Fee of £1 per day. If you are switching to Santander then there will be no Arranged Overdraft Usage Fee for the first 4 months. Assumed Arranged Overdraft credit limit: £1,200. Actual credit limit may differ. Arranged Overdraft Usage Fee depends on the amount of overdraft you are using

Get up to £15 every month in cash rewards (subject to eligibility)
Made up of £7 for banking with Barclays (£3.50 a month for each Direct Debit payment); £5 monthly Mortgage reward and up to £3 monthly Insurance reward

Customers can also earn an enhanced rate of cashback with over 150 retailers and Expedia when shopping through Barclays

Barclays Bank Account with Blue Rewards

Get up to £15 every month in cash rewards (subject to eligibility)
Made up of £7 for banking with Barclays (£3.50 a month for each Direct Debit payment); £5 monthly Mortgage reward and up to £3 monthly Insurance reward

Customers can also earn an enhanced rate of cashback with over 150 retailers and Expedia when shopping through Barclays

0%
AER

£3 Per Month

£800Per Month

Daily Fees Apply

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Representative Example: Up to £5,000 (Subject to application and status). If you use an arranged overdraft of £1,200 you will be charged £1.50 per day when used

Apply

First Direct

£100 Switching incentive + First Direct satisfaction guarantee**

Mobile banking on the go with our app for iPhone, Android and iPad

£250 free of overdraft interest

* Pay £1,000 or more into your account each month & First Direct waive the £10 monthly fee
** Satisfaction guarantee - if you're not happy First Direct give you £100

Interest AER

0%
AER

Monthly Fee

£0*Per Month

Overdraft Charges

15.90%EAR (variable)

Representative Example: If you use an overdraft limit of £1,200 the interest rate charged will be 15.9% EAR (variable)

Apply

Apply

NatWest Reward

2% back in Rewards on 7 types of household bills if paid by direct debit (including, but not limited to, Council Tax, telephone, water, gas, electricity, TV)

On average NatWest customers earn £83 Rewards per year. Based on monthly bills of £345 excluding the monthly £2 fee

Earn at least 1% on qualifying purchases at NatWest Reward partners

Interest AER

0%
AER

Monthly Fee

£2 Per Month

Overdraft Charges

19.89%EAR (variable)

Representative Example: If you use an overdraft limit of £100 a 19.89% EAR (variable) charge will apply

Monthly interest of 1.50% AER/1.49% gross (variable) payable on balances up to £20,000

Interest AER

1.50%
AER

Monthly Fee

£5 Per Month

Overdraft Charges

£1per day

Representative Example: 0% EAR (variable) Arranged Overdraft. Arranged Overdraft Usage Fee of £1 per day. If you are switching to Santander then there will be no Arranged Overdraft Usage Fee for the first 4 months. Assumed Arranged Overdraft credit limit: £1,200. Actual credit limit may differ. Arranged Overdraft Usage Fee depends on the amount of overdraft you are using

Apply

Apply

Barclays Bank Account

Add a favourite photo to your debit card

Earn cashback when you shop online and in-store through Barclays with over 150 retailers

Stay in control of your account with free text alerts

*AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year

Interest AER

0%*
AER

Monthly Fee

£0 Per Month

Overdraft Charges

Daily Fees Apply

Representative Example: Up to £5000 (subject to application and status). If you use an arranged overdraft of £1,200, you will be charged £1.50 per day when used

Apply

Apply

Barclays Bank Account with Blue Rewards

Get up to £15 every month in cash rewards (subject to eligibility)
Made up of £7 for banking with Barclays (£3.50 a month for each Direct Debit payment); £5 monthly Mortgage reward and up to £3 monthly Insurance reward

Customers can also earn an enhanced rate of cashback with over 150 retailers and Expedia when shopping through Barclays

Interest AER

0%
AER

Monthly Fee

£3 Per Month

Overdraft Charges

Daily Fees Apply

Representative Example: Up to £5,000 (Subject to application and status). If you use an arranged overdraft of £1,200 you will be charged £1.50 per day when used

Apply

Apply

This table features popular current accounts sorted from lowest to highest on the overdraft charges which would be applied for a £200 overdraft over one month. Other tables feature products from other categories. Please ensure you have thoroughly investigated all available options before applying for products.

Why get low overdraft fees?

Overdrafts aren’t necessarily the best way to borrow money for the longer term. In fact, if used badly, overdrafts can be one of the most expensive forms of loan available.

Ideally, if you need to borrow money, you should seek out cheaper forms of credit (money transfer cards, personal loans etc.) before using an overdraft. However, we don’t live in an ideal world, and many people still use their overdraft every month to 'get by', seeing it as the least bad option. So, if using an overdraft is a financial necessity, how can you minimise the cost of such borrowing? And how can you protect yourself if you unexpectedly need short-term credit?

How are overdrafts charged?

In the UK, overdrafts fees tend to be structured in one of two ways.

Interest

Historically, all overdrafts were charged as a rate of interest and expressed as an EAR (equivalent annual rate). EAR is very similar to the more commonly used APR (annual percentage rate), which is used to show the cost of borrowing over a single year on a fixed debt, including any charges (as with personal loans). But, while APR applies to products that are only designed for borrowing, EAR indicates that the product might (and ideally should be) in credit.

So for example, if you maintained a £500 overdraft for one year (you didn't repay anything), and your EAR interest was 20%, you'd pay £100 in interest per year - (£16.66 per month/54p per day).

Daily charges

After criticism from regulators (that overdraft charges were opaque), some UK banks moved to introduce daily fees to increase transparency.

Typically, daily overdraft fees are charged on a tiered structure, linked to the overdraft amount. (eg. £1 for overdrafts up to £1,000, £2 for overdrafts up to £2,000, or £3 for overdrafts over £2,000).

The aim of daily overdraft fees was commendable, yet they are not without critics. For instance, the difference between an overdraft of £1000 and £1001, based on the structure above, would be £31 (a 100% increase in charges for an additional £1 borrowing).

It is also the case that fee-based overdraft charges tend to be higher than interest-based charges. For example, to incur the same £365 in charges that a £1,000 overdraft on daily charges of £1 would, an EAR would need to be 36.5%, a rate higher than many bad credit credit cards. Furthermore, this example does not account for the fact that by month 2 of the daily charge structure, you will have moved into a higher tiered rate.

Finally, although daily fees are arguably more transparent, they can also encourage people to increase their debt levels, since it may have no effect on their monthly charge - borrowing £500 per month might cost the same as £999 (£1 per day). Obviously, in the short-term (for emergencies), that might be useful, but the debt will ultimately need to be repaid, so increasing it is only likely to result in additional charges.

Minimising your overdraft fees

The criticisms of daily charges described above could prove to be a key motivator in ensuring that you don't get into debt, which is always preferable.

However, if you tend to be reliant on your overdraft month on month, you should always look to minimise what you pay by choosing an EAR based charging structure, rather than a daily fee tier. Or, even better, you should find a cheaper alternative source of credit for long-term debt, and avoid using your overdraft unless absolutely necessary. This will then mean you can focus your current account switching on obtaining features that will offer tangible benefits to your life, rather than simply the best overdraft rate.

Can I switch current accounts while I have an overdraft?

Assuming you are approved for an overdraft (they are always subject to a credit and status check), then yes. Overdraft charges are one of the main methods banks use to make money, and your new bank will be very happy to make money from you.

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